Immersion Corporation Reports Second Quarter 2014 Results

Immersion Corporation (NASDAQ:IMMR), the leading developer and licensor
of touch feedback technology, today reported financial results for the
second quarter ended June 30, 2014.

Results for the three months ended June 30, 2014

Total revenues for the second quarter of 2014 were $11.8 million, an
increase of 16% compared to $10.2 million for the second quarter of
2013. Royalty and license revenues of $11.6 million for the second
quarter of 2014 were up 16% from the same period last year. Net income
for the second quarter of 2014 was $169,000, or $0.01 per diluted share.
This compares to net income of $466,000, or $0.02 per diluted share, for
the second quarter of 2013.

Non-GAAP net income for the second quarter of 2014 was $1.5 million, or
$0.05 per diluted share, compared with non-GAAP net income of $1.6
million, or $0.06 per diluted share, for the second quarter of 2013.
(See attached table for a reconciliation of GAAP to non-GAAP financial
measures.)

As of June 30, 2014, Immersion’s cash, cash equivalents, and short-term
investments were $74.2 million, compared to $71.1 million as of December
31, 2013. During the June quarter, the Company used $109 thousand to buy
back approximately 11 thousand shares of its common stock under its
stock repurchase program.

Management Commentary

“We are pleased to report record June quarter revenues and our sixth
consecutive quarter of profitability,” said Vic Viegas, chief executive
officer of Immersion. “During the period, we continued to make great
progress in executing across our key initiatives with both our OEM
customers and our content business. This includes the launch of our new
official business entity in Shanghai as well as our entering into a new
multi-year licensing agreement with Huawei, one of the largest
smartphone makers in the world.”

“We are very optimistic regarding the opportunities in front of us given
the headway we have made to date and our prospects for growth in the
future. However, due to the timing of new agreements and the pace of
certain negotiations, including our renewal negotiations with LG
Electronics, we are revising our 2014 financial outlook. We now expect
revenues for 2014 to be in the range of $51 million to $56 million, an
increase of between 7% and 18% over the prior year. Non-GAAP net income
for 2014 is anticipated to be in the range of $6 million to $12
million,” concluded Mr. Viegas.

The addition of new mobile licensee Huawei Device (Dongguan) Co.,
Ltd., the third largest global supplier of smartphones according to
IDC. This first direct license agreement with Huawei for Immersion’s
haptic software, TouchSense 3000, enables Huawei to add tactile
feedback to certain Huawei branded devices to create rich,
multi-dimensional user experiences.

The expansion of Immersion’s haptic business in China with the opening
of an official business entity. Immersion (Shanghai) Science &
Technology Company, Ltd., a wholly owned subsidiary in China, expands
the Company’s sales and support activities as it continues to grow its
customer base in China, broadens its engagement with the Chinese
mobile ecosystem, and establishes a new technology center and base of
operations in the region.

Immersion’s entry into a content and media evaluation license
agreement with a second significant mobile ad network, setting the
stage for additional testing and integration work as the Company moves
toward commercial launches of haptically-enhanced ads as early as this
calendar year.

Conference Call Information

Immersion will host a conference call with company management on
Thursday, July 31, 2014 at 2:00 p.m. Pacific time (5:00 p.m. Eastern
time) to discuss financial results for the second quarter ended June 30,
2014. To participate on the live call, analysts and investors should
dial +1 888-455-2260 (conference ID: 2161690) at least ten minutes prior
to the start of the call. A live and archived webcast of the conference
call will also be available for 90 days within the investor relations
section of Immersion’s corporate Web site at www.immersion.com.

Founded in 1993, Immersion (NASDAQ:IMMR) is the leading innovator in
haptic technology; the company’s touch feedback solutions deliver a more
compelling sense of the digital world. Using Immersion’s high-fidelity
haptic systems, partners can transform user experiences with unique and
customizable touch feedback effects; excite the senses in games, videos
and music; restore “mechanical” feel by providing intuitive and
unmistakable confirmation; improve safety by overcoming distractions
while driving or performing a medical procedure; and expand usability
when audio and visual feedback are ineffective. Immersion’s TouchSense
technology provides haptics in mobile phone, automotive, gaming, medical
and consumer electronics products from world-class companies. With over
1,700 issued or pending patents in the U.S. and other countries,
Immersion helps bring the digital universe to life. Hear what we have to
say at blog.immersion.com.

Use of Non-GAAP Financial Measures

Immersion reports all financial information required in accordance with
generally accepted accounting principles (GAAP), but it believes that
evaluating its ongoing operating results may be difficult to understand
if limited to reviewing only GAAP financial measures. Immersion
discloses this non-GAAP information, such as Non-GAAP Net Income and
Non-GAAP Net Income per diluted common share, because it is useful in
understanding the company’s performance as it excludes certain non-cash
expenses and other special charges that many investors feel may obscure
the company’s true operating performance. Likewise, management uses
these non-GAAP financial measures to manage and assess the profitability
of its business. Investors are encouraged to review the related GAAP
financial measures.

Forward-looking Statements

This press release contains “forward-looking statements” that involve
risks and uncertainties as well as assumptions that, if they never
materialize or prove incorrect, could cause the results of Immersion
Corporation and its consolidated subsidiaries to differ materially from
those expressed or implied by such forward-looking statements.

All statements, other than the statements of historical fact, are
statements that may be deemed forward-looking statements, including, but
not limited to, the statement regarding positioning Immersion to
capitalize on exciting market opportunities and a growing market
awareness that Immersion’s touch technologies can bring richness and
realism to advanced user interfaces in a wide variety of emerging
industries and our expectation that revenues for 2014 will be in the
range of $51 million to $56 million and non-GAAP net income for 2014
will be in the range of $6 million to $12 million.

Immersion’s actual results might differ materially from those stated or
implied by such forward-looking statements due to risks and
uncertainties associated with Immersion’s business, which include, but
are not limited to, potential and actual claims and proceedings,
including litigation involving Immersion’s intellectual property; delay
in or failure to achieve commercial demand for Immersion’s or its
licensees’ products; a delay in or failure to achieve the acceptance of
force feedback as a critical user experience; unexpected difficulties in
monetizing the patent portfolio; the commercial success of applications
or devices into which Immersion’s technology is licensed; potentially
lengthy sales cycles and design processes; unanticipated difficulties
and challenges encountered in development efforts; unexpected costs;
failure to retain key personnel; competition; the inherently uncertain
nature of litigation which makes future outcomes and timing difficult to
predict; the impact of global economic conditions and other factors.
Many of these risks and uncertainties are beyond the control of
Immersion.

For a more detailed discussion of these factors, and other factors that
could cause actual results to vary materially, interested parties should
review the risk factors listed in Immersion’s Annual Report on Form 10-K
for 2013 which is on file with the U.S. Securities and Exchange
Commission. The forward-looking statements in this press release reflect
Immersion’s beliefs and predictions as of the date of this release.
Immersion disclaims any obligation to update these forward-looking
statements as a result of financial, business, or any other developments
occurring after the date of this release.

Immersion, the Immersion logo, TouchSense, HD Haptics and Reverb are
trademarks of Immersion Corporation in the United States and other
countries. All other trademarks are the property of their respective
owners.

The use of the word “partner” or “partnership” in this press release
does not mean a legal partner or legal partnership.

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